How important is technology to financial services companies? Well, Lloyd Blankfein, CEO, Goldman Sachs, recently stated publicly that he considers Goldman Sachs a technology company. What could be a better justification of the importance of IT to financial services firms?
To those working in the industry, Blankfein’s assertion should come as no surprise. Financial firms have historically invested more money on IT than any other industry. As the scale of that investment increases, the role of the Chief Information Officer (CIO) is becoming increasingly important.
Historically, CIOs in financial services firms had operational roles. Their purpose was to ensure that the IT infrastructure worked to allow for appropriate response times, accuracy, and – of course – security.
Today, that’s not enough. Financial service firms need IT leaders who can think strategically and build competitive technology systems that can increase their market share. In retail financial services, in particular, there are threats from non-traditional firms like Google, Facebook, and Amazon, which may mortgage and personal credit business lines.
The question being raised is whether the Chief Information Officer (CIO) is the right person to lead these firms in the future. The CIO has traditionally functioned in financial services companies in an operational role—ensuring that the IT infrastructure worked to provide appropriate response times, accuracy, and of course security.
But today, that’s not enough. Financial service firms need leaders that are more adept to building competitive strategies that can lead their firms to market share. There are numerous threats from other non-traditional financial firms such as Google, Facebook, and Amazon, which may invade many traditional banking functions, particularly mortgage and personal credit services.
If you’re a banking CIO now, therefore, the challenge is to step up – to focus on driving revenue for their firms while still providing the kind of operational support they’ve mastered over the past decades. It’s about driving the business strategically, whilst supporting it operationally. ‘Drivers’ are projects that affect a firm’s relationship with its clientele. ‘Supporters’ are activities that are operational in nature.
Here are some tips on what future CIOs need to do:
1. Push yourself outside your professional comfort zone. Successful CIOs need to keep reinventing themselves and should strive for continual excellence at their jobs. Look for more responsibilities in different places outside the normal IT functions.
2. Improve communication. Without great communication skills, CIOs cannot influence the business or even imagine an integration strategy.
3. Do not shy away from tough decisions. CIOs must do what is necessary, especially with their staffs and constituents. If someone is not performing, do the right thing and make the necessary changes.
4. Get used to ambiguity. If you need to be told exactly the problem, you will likely not bring much value. The life of most executives requires an existence in the uncertain and poorly defined.
5. Take risks. A strategic CIO cannot achieve success without engaging in projects that have risk factors; it’s reality. The challenge for the CIO is to understand the extent of the challenge and the significance of the rewards to the business.
6. Lead without authority. Great leaders can influence the behaviors in others without using the power of their position. Influencing the change of behavior in others is far more sustainable.
7. Learn to listen. CIOs must learn to listen to the feedback they receive and listen to what people really need. Too many CIOs think they know what people want, which often is not accurate.
Make no mistake—the need for qualified CIOs is growing—but the new crop of banking technology leaders must be heavily invested in working closely with their business colleagues.
Dr. Arthur M. Langer is the Director of the Center for Technology Management and sits on multiple faculties at Columbia University. He oversees executive masters programs in IT management that provide a pipeline of future IT leaders. The programme is offering a residency in Paris, starting in October. For further information, contact the assistant director at email@example.com.